Reply Brief - Lindsey Matter

Case 2:10-cr-01031-AHM Document 290 Filed 03/17/11 Page 1 of 27 Page ID #:6420
1 JANET I. LEVINE (STATE BAR NO. 94255)

MARTINIQUE E. BUSINO (STATE BAR NO. 270795)
2 CROWELL & MORING LLP
515 SOUTH FLOWER STREET, 40TH FLOOR
3 LOS ANGELES, CALIFORNIA 90071-2258
PHONE: (213) 622-4750
4 FAX: (213) 622-2690
EMAIL: jlevine@crowell.com
5 EMAIL: mbusino@crowell.com
6 Attorneys for Defendant
Steve K. Lee
7
JAN L. HANDZLIK (STATE BAR NO. 47959)
8 THOMAS H. GODWIN (STATE BAR NO. 255384)
GREENBERG TRAURIG LLP
9 2450 Colorado Avenue, Suite 400 East
Santa Monica, Ca 90404
10 Phone: (310) 586-6542
Fax: (310) 586-0542
11 EMAIL: handzlikj@gtlaw.com
EMAIL: godwint@gtlaw.com
12
Attorneys for Defendants Lindsey Manufacturing
13 Company and Keith E. Lindsey
14
UNITED STATES DISTRICT COURT
15
CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION
16
17 UNITED STATES OF AMERICA, ) CASE NO. CR 10-1031(A)-AHM

)
18
Plaintiff, ) REPLY TO GOVERNMENT’S
19 ) OPPOSITION TO DEFENDANTS’
v. ) MOTION TO DISMISS THE FIRST
20
) SUPERSEDING INDICTMENT
21 ENRIQUE FAUSTINO AGUILAR )
NORIEGA, ANGELA MARIA ) Date: March 24, 2011
22 GOMEZ AGUILAR, LINDSEY
MANUFACTURING COMPANY, ) Time: 9:30 a.m.
23 KEITH E. LINDSEY, and ) Place: Courtroom 14
STEVE K. LEE, )
24
Defendants. )
25 )
)
26
)
27 )
28
REPLY TO GOVERNMENT’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS
THE FIRST SUPERSEDING INDICTMENT
1 TABLE OF CONTENTS
2 Page(s)
3 I. INTRODUCTION.....................................................................................1
4 II. ARGUMENT ............................................................................................1
5 A. The Defendants’ Motion is Timely.................................................1
6 B. The Government’s Textual and Contextual Arguments About
7 the Meaning of “Instrumentality” are Unavailing ..........................2
8 C. The Charming Betsy Canon Is Inapposite ......................................7
9 D. No Legislative History Supports the Government’s
10 Interpretation.................................................................................12
11 E. The Government Fails to Rebut Defendants’ Vagueness
12 Arguments.....................................................................................14
13 F. Prior Cases the Government Cites are Inapposite Because They
14 Did Not Raise Issues the Court Is Now Asked to Address ..........17
15 III. CONCLUSION .......................................................................................20
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i
1 TABLE OF AUTHORITIES
2 Page(s)
3 CASES
4 Circuit City Stores, Inc. v. Adams,
5
532 U.S. 105 (2001) ............................................................................................. 4
6 Kolender v. Lawson,
461 U.S. 352 (1983) ........................................................................................... 16
7
8 Munoz v. Ashcroft,
339 F.3d 950 (9th Cir. 2003)................................................................................ 9
9
Murray v. The Schooner Charming Betsy,
10
6 U.S. (2 Cranch) 64 (1804) ....................................................................... 8, 9, 10
11
Northcross, et al. v. Bd. of Ed. of Memphis City Schools¸
12 412 U.S. 427 (1973) ......................................................................................... 6, 7
13
Serra v. Lappin,
14 600 F.3d 1191 (9th Cir. 2010).............................................................................. 9
15 Skilling v. United States,
16 130 S. Ct. 2896 (2010) ........................................................................... 16, 17, 20
17 Smith v. City of Jackson,

544 U.S. 228 (2005) ......................................................................................... 6, 7
18
19 United States v. Aguilar,
883 F.2d 662 (9th Cir. 1989).............................................................................. 10
20
United States v. Carson, et al.,
21
No. SA CR 09-00077-JVS (C.D. Cal.)............................................................... 13
22
United States v. Covington,
23 395 U.S. 57 (1969) ............................................................................................... 2
24
United States v. Giffen,
25 326 F. Supp. 2d 497 (S.D.N.Y. 2004)................................................................ 18
26 United States v. Kay,
27 359 F.3d 738 (5th Cir. 2004).............................................................................. 10
28
ii
1 United States v. Mazurie,

2
419 U.S. 544 (1975) ........................................................................................... 15
3 United States v. Nguyen, et al.,

No. 08-522-TJS (E.D. Pa.) ..................................................................... 17, 18, 19
4
5
United States v. Panarella,
277 F.3d 678 (3d. Cir. 2002) ................................................................................ 2
6
United States v. Santos,
7
553 U.S. 507 (2008) ........................................................................................... 14
8
Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc.
9 455 U.S. 489 (1982) ..................................................................................... 15, 16
10
Whitney v. Robertson,
11 124 U.S. 190 (1888) ............................................................................................. 9
12 STATUTES
13
15 U.S.C. § 78dd-2(b) ............................................................................................... 5
14
15 U.S.C. § 78dd-2(h)(4)........................................................................................... 5
15
18 U.S.C. § 1346...................................................................................................... 16
16
17 OTHER AUTHORITIES
18 Commentaries on the Convention on Combating Bribery of Foreign Public

Officials in International Business Transactions,” adopted by the
19
Negotiating Conference on Nov. 21, 1997, Commentary 15............................... 8
20
Federal Rule of Criminal Procedure 11(b)(3) ......................................................... 18
21
Federal Rules of Criminal Procedure 7(c)(1) ........................................................ 1, 2
22
23 http://www.cfe.gob.mx/lang/en/Pages/thecompany.aspx ......................................... 3
24 The International Anti-Bribery and Fair Competition Act of 1998: Hearing

Before the Subcomm. on Finance and Hazardous Materials of the Comm.
25
on Commerce, 105th Cong. 22 (1998) (Testimony of Paul V. Gerlach,
26 Associate Director, Division of Enforcement, Securities and Exchange
Commission)................................................................................................... 9, 10
27
28
iii
1 Restatement (Third) of Foreign Relations Law § 114............................................... 8

2 Vienna Convention on the Law of Treaties, 1155 U.N.T.S. 331, art. 31 (May
3 23, 1969)............................................................................................................. 11
4 Wright & Leipold, Federal Practice and Procedure: Criminal 4th §170, at
5
145 (2008)........................................................................................................... 18
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iv
1 Defendants Lindsey Manufacturing Company, Keith E. Lindsey, and Steve

2 K. Lee, by their counsel of record, hereby submit their reply to the Government’s
3 Opposition to Defendants’ Motion to Dismiss the First Superseding Indictment.
4
5 DATED: March 17, 2011 Respectfully submitted,

6
JANET I. LEVINE
8
9 _/s/ Janet I. Levine __________________

10 By: JANET I. LEVINE
Attorneys for Defendant
11 Steve K. Lee
12

14
JAN L. HANDZLIK
15 GREENBERG TRAURIG LLP
16
17 __/s/ Jan L. Handzlik___________________

18 By: JAN L. HANDZLIK
Attorneys for Defendants
19 Lindsey Manufacturing Company and
20 Keith E. Lindsey
21
22
23
24
25
26
27
28
1
1 I. INTRODUCTION
2 The text and legislative history of the Foreign Corrupt Practices Act
3 (“FCPA”) establish that Congress had numerous opportunities to make clear that
4 “foreign officials” (to whom bribes are prohibited under the FCPA) include
5 employees of state owned corporations. On each occasion, Congress declined to
6 do so, and nothing in the legislative history indicates it believed the Act implicitly
7 established this. As a result, it is apparent that Congress either did not intend to
8 incorporate into the FCPA the concept of state owned corporations or may have
9 intended to do so but failed to make its intent sufficiently clear so that the average
10 citizen could understand what conduct the FCPA prohibits. In either case, the First
11 Superseding Indictment (“FSI”) is invalid as a matter of law because it rests on
12 allegations of payments to employees of state owned corporations. The
13 government tries to overcome these silences in the statute and history with
14 exaggerated invocation of canons of construction and reliance on non-precedent
15 such as uncontested jury instructions and plea agreements. The government’s
16 efforts fail and the Court should accordingly grant defendants’ motion to dismiss.
17 II. ARGUMENT
18 A. The Defendants’ Motion is Timely
19 The government misconstrues the defendants’ position that the Court should
20 rule on its motion now, pretrial. First, the government addresses Federal Rule of
21 Criminal Procedure 7(c)(1), notwithstanding the fact that defendants have not
22 objected to the sufficiency of the allegations in the FSI. Opposition to Defendants’
23 Motion to Dismiss the First Superseding Indictment (Docket No. 250) (“Gov’t
24 Opp.”) at 6-7; 8. Second, the government claims that the defendants have asked
25 the Court to rule, “before the presentation of any evidence, that the government has
26 not met its factual burden.” Id. at 8. The government suggests that facts it intends
27 to prove at trial, the description of which take up a great deal of space, could alter
28
1
1 the landscape for purposes of this dispute. Id. at 3-4; 5-8. The government’s
2 factual claims are of no moment, however. For purposes of their motion,
3 defendants Lindsey Manufacturing Company (“LMC”), Keith E. Lindsey and
4 Steve K. Lee do not dispute the factual allegations in the FSI, but instead accept
5 that the Mexican Comisión Federal de Electricidad (“CFE”) is a government
6 owned corporation as the indictment alleges. The motion raises the purely legal
7 argument that this characteristic of CFE – no matter what else may be true about
8 the entity – disqualifies it as an entity properly addressed by an FCPA indictment.
9 Thus, the question before the Court is a pure question of law rather than of fact,
10 and is appropriate for pretrial determination. United States v. Covington, 395 U.S.
11 57, 60 (1969); Defendants’ Notice of Motion and Motion to Dismiss the First
12 Superseding Indictment (Docket No. 220) (“Def. Mot.”) at 5-6.
13 The Court should dismiss the indictment because “the specific facts
14 alleged . . . fall beyond the scope of the relevant criminal statute, as a matter of
15 statutory interpretation.” United States v. Panarella, 277 F.3d 678, 685 (3d. Cir.
16 2002).
17 B. The Government’s Textual and Contextual Arguments About the
18 Meaning of “Instrumentality” Are Unavailing
19 The government argues that Congress intended the definition of “foreign
20 official” to include employees of state owned corporations. To support this
21 argument, it makes textual and contextual arguments derived from the “foreign
22 official” definition as a whole, other parts of the FCPA, and other parts of the U.S.
23 Code. Nothing to which the government points actually supports its interpretation
24 of the term.
25 First, the government concedes that in order to discern the plain meaning of
26 “instrumentality,” the Court should interpret the term “in context with the
27 provision as a whole.” Gov’t Opp. at 24. The government also does not dispute
28 that the ejusdem generis doctrine (a variant of the noscitur a sociis doctrine) should
2
1 guide the Court’s analysis of that issue. Id. To support its argument that
2 “instrumentality” includes any tool of a foreign government, however, the
3 government misconstrues the ejusdem generis doctrine, and mischaracterizes (and
4 selectively quotes) defendants’ arguments about the effect of the doctrine on the
5 interpretation of “instrumentality.” The government wrongly suggests that
6 defendants argued that if state owned corporations share any qualities with
7 departments or agencies, then these entities are within the definition of
8 “instrumentality.” Gov’t Opp. at 24-25. In fact, the defendants actually argued
9 that the doctrine of ejusdem generis demands that the term “instrumentality” be
10 interpreted not in light of any characteristic of departments and agencies, but rather
11 in light of what is consistent between and what defines “departments” and
12 “agencies.” Def. Mot. at 8. That is, only entities that have characteristics like
13 those that are the sin qua non of both agencies and departments qualify as
14 “instrumentalities.” Def. Mot. at 7-9.
15 Foreign government agencies and departments exist only when created by
16 governments, and are always funded solely by governments or by exercise of their
17 power to enforce government policies and laws. They always and only exist to
18 execute, administer and enforce government policies. These characteristics unite
19 and define agencies and departments. In contrast, corporations, even corporations
20 in which governments have an interest, are not always created by governments
21 (some are bailed out by governments, or expropriated by governments, for
22 example). Such corporations are not always funded solely by governments (some,
23 like CFE for example, earn revenue by charging customers for their commercial
24 services).1 Such corporations often do more than execute policy (some, like the
25
1
26 The government describes CFE as simply providing electricity as a public
27
service, Gov’t Opp. at 2, omitting that it provides the electricity for sale. See
http://www.cfe.gob.mx/lang/en/Pages/thecompany.aspx (describing the
28 distribution of its sales to customers).
3
1 CFE, operate commercial enterprises). In every country, agencies and departments

2 (and ministries and bureaus, and other entities which share defining characteristics
3 with agencies and departments) have defined meanings, and each such entity (that
4 is, each agency, or each bureau) shares certain defining qualities with others with
5 the same status (that is, other agencies, or other bureaus, respectively). In contrast,
6 in every country, corporations take myriad forms and are created and operated in
7 myriad ways, for myriad and variable purposes.
8 In Circuit City Stores, Inc. v. Adams, the Supreme Court applied the ejusdem
9 generis principle to construe Section 1 of the Federal Aviation Act, which
10 “provides the Act shall not apply ‘to contracts of employment of seamen, railroad
11 employees, or any other class of workers engaged in foreign or interstate
12 commerce.’” 532 U.S. 105, 112 (2001) (quoting 9 U.S.C. § 1) (emphasis added).
13 Over the argument that the § 1 exception “exclude[s] all contracts of employment
14 from the reach of the FAA,” id., the Court held that the clause “exempts from the
15 FAA only contracts of employment of transportation workers.” Id. at 119
16 (emphasis added). The Court wrote that:
17 Construing the residual phrase [“or any other class of
18
workers engaged in foreign or interstate commerce”] to
exclude all employment contracts fails to give
19 independent effect to the statute’s enumeration of the
20
specific categories of workers which precedes it; there
would be no need for Congress to use the phrases
21 “seamen” and “railroad employees” if those same classes
22 of workers were subsumed within the meaning of the
“engaged in ... commerce” residual clause. The wording
23 of § 1 calls for the application of the maxim ejusdem
24 generis, the statutory canon that “where general words
follow specific words in a statutory enumeration, the
25 general words are construed to embrace only objects
26 similar in nature to those objects enumerated by the
preceding specific words.”
27
28
4
1 Id. at 114-115 (citations and quotations omitted). Likewise, here, for the Court to
2 construe “instrumentality” to include any tool a government might use (which per
3 se would include agencies and departments) would fail to give independent effect
4 to the specific categories of the tools that precede the term “instrumentality”
5 (agencies and departments). Accordingly, the Court should look for defining
6 similarities between agencies and departments and consider only entities that share
7 these qualities to fall within the definition of “instrumentality.”
8 Likewise, the government’s arguments about the use of the term “any” are
9 unavailing. The government argues that because “any” appears before
10 “department, agency or instrumentality,” the court should interpret
11 “instrumentality” broadly. See Gov’t Opp. at 19-21. However, “any” does not
12 modify just “instrumentality” standing alone in the FCPA. If it did, perhaps the
13 government’s argument that “instrumentality” should encompass any and all tools
14 of the government would be more persuasive. One could read “any
15 instrumentality” to include agencies, departments, and any other tool of the
16 government. “Any” modifies the entire list within which “instrumentality” falls,
17 however, so its appearance does not suggest that the broadest reading of
18 instrumentality should apply. All the use of the word signals is that, once the
19 limits of “instrumentality” are discerned, anything within those limits is within the
20 statute.
21 Second, the government is wrong that the further context provided by the
22 “routine governmental action” exception in the FCPA is evidence that Congress
23 contemplated corporations as “instrumentalities.” See 15 U.S.C. § 78dd-2(b)
24 (permitting payments to foreign official and others to “secure the performance of a
25 routine governmental action by a foreign official,” among others); see Gov’t Opp.
26 at 12-14. The provision provides that routine governmental action “means only an
27 action which is ordinarily and commonly performed by a foreign official in”
28 among other things, “providing phone service, power and water supply[.]” 15
5
1 U.S.C. § 78dd-2(h)(4). The government implies that the latter text proves that
2 Congress believed that entities that provide power supply can be foreign officials.
3 Gov’t Opp. at 14. But the Court need not disagree with this in order to also
4 conclude that commercial corporations that provide power supply are nevertheless
5 not “instrumentalities,” and their employees not “foreign officials.” The focus of
6 the “foreign official” definition is not the nature of the service provided by the
7 entity in question. The focus of the statute, and thus the appropriate focus for the
8 Court, is the nature of the entity in question. In sum, there is nothing in the text of
9 the FCPA that suggests state owned corporations can be instrumentalities – no
10 matter what their business is.
11 Third, the Foreign Sovereign Immunities Act (FSIA) and the Economic
12 Espionage Act (EEA) do not support the government’s interpretation of
13 “instrumentality.” The government purports to rely on the “premise that when
14 Congress uses the same language in two statutes having similar purposes,
15 particularly when one is enacted shortly after the other[,] [i]t is appropriate to
16 presume that Congress intended that text to have the same meaning in both
17 statutes.” Smith v. City of Jackson, 544 U.S. 228, 233 (2005), cited in Gov’t Opp.
18 at 21. It claims that this means that Congress must have intended the term
19 “instrumentality” in the FCPA to have the same meaning it has in the FSIA and
20 EEA.
21 The government overstates the Smith premise. In Smith, the statutory
22 language the Court compared to the language at issue was almost exactly the same,
23 and the statutes the Court compared had identical purposes – the elimination of
24 certain discrimination in employment. Smith, 544 U.S. at 233 (analyzing statute
25 that prohibited “otherwise adversely affect[ing a person’s] status as an employee,
26 because of such individual’s age,” in light of interpretations of earlier statute that
27 prohibited the same conduct, using the same terms, because of a person’s “race,
28 color, religion, sex, or national origin . . .”). The same was true in Northcross, et
6
1 al. v. Bd. of Ed. of Memphis City Schools¸ 412 U.S. 427, 428 (1973), the case cited
2 by the Supreme Court in Smith for the proposition the government seeks to apply
3 here. 412 U.S. at 428 (comparing two attorney fees statutes with identical
4 language and a “common raison d’être”). The government does not even argue –
5 nor could it – that the FSIA and EEA are analogously similar to the FCPA or
6 analogously driven by the same goal. Moreover, Congress passed the EEA after
7 the FCPA; it has no relevance to Congress’ thinking in 1977, except that, like the
8 FSIA, it demonstrates that Congress is capable of clearly defining
9 “instrumentality” to include state owned corporations when it wants to. The
10 premise upon which the government relies is far overstated and inapposite.
11 If Congress believed “instrumentality” per se included state owned entities,
12 it would have had no reason to state so explicitly in the FSIA and EEA. Clearly,
13 Congress presumes that state owned entities should be understood as something
14 different from “instrumentalities,” unless Congress explicitly states otherwise. The
15 recent Dodd-Frank Act confirms this, given that, in that Act, Congress explicitly
16 distinguished “instrumenatlit[ies]” from “compan[ies] owned by a foreign
17 government,” a development the government completely ignores in its brief. See
18 Def. Mot. at 9 n.8.
19 The government seeks to put words into Congress’s mouth and read terms
20 into the FCPA that do not exist. The FSIA and EEA demonstrate that Congress is
21 perfectly capable of defining terms for itself. The Court should leave it to
22 Congress to further define instrumentality if Congress believes the FCPA should
23 address payments intended to influence state owned corporations.
24 C. The Charming Betsy Canon Is Inapposite
25 The government suggests that the Court should find that “instrumentality”
26 includes state owned corporations because that interpretation is more consistent
27 with the OECD Convention, which defines “foreign public official” to include a
28 person “exercising a public function for a foreign country, including for a . . .
7
1 public enterprise.” Gov’t Opp. at 14-16 (quoting Organization for Economic

2 Cooperation and Development Convention on Combating Bribery of Foreign
3 Public Officials in International Business Transactions, Dec. 14, 1960, 12 U.S.T.
4 1728, 888 U.N.T.S. 179 (hereinafter “OECD Convention”), art. 1.4.a).2 The
5 government argues that Congress intended for its 1998 amendments to bring the
6 FCPA into perfect conformity with the OECD Convention. Given that intent, the
7 government concludes that the failure to explicitly add language to the effect that
8 payments to employees of “public enterprises” are prohibited by the FCPA
9 suggests that Congress believed the FCPA already implicitly prohibited such
10 payments by way of the “instrumentality” definition. Gov’t Opp. at 17-19.
11 First, the government’s Charming Betsy argument fails to account for a key
12 element of that doctrine. Although it is true that a court should strive to interpret
13 ambiguous statutes “so as not to conflict with international law or with . . . an
14 international agreement of the United States,” Gov’t Opp. at 15, quoting
15 Restatement (Third) of Foreign Relations Law § 114, this is only true “where fairly
16 possible.” Restatement (Third) of Foreign Relations Law § 114 (emphasis added);
17 Murray v. The Schooner Charming Betsy, 6 U.S. (2 Cranch) 64, 118 (1804) (“[A]n
18 act of Congress ought never to be construed to violate the law of nations if any
19 other possible construction remains[.]”) (emphasis added). As the Ninth Circuit
20 has explained, courts may “invoke the Charming Betsy canon only where
21 conformity with the law of nations is relevant to considerations of international
22
23
2
Commentary 15 to the Convention, discussed below, provides definition to
24
the phrase “exercising a public function.” Commentaries on the Convention on
25 Combating Bribery of Foreign Public Officials in International Business
Transactions,” adopted by the Negotiating Conference on Nov. 21, 1997
26
(hereinafter “OECD Convention Commentaries”), Commentary 15. The text of
27 the Convention and the Commentaries are available at
http://www.oecd.org/dataoecd/4/18/38028044.pdf.
28
8
1 comity and only ‘where it is possible to do so without distorting the statute.’”

2 Serra v. Lappin, 600 F.3d 1191, 1198 (9th Cir. 2010) (emphasis added) (citing Arc
3 Ecology v. United States Dep't of the Air Force, 411 F.3d 1092, 1102-03 (9th Cir.
4 2005) and quoting Munoz v. Ashcroft, 339 F.3d 950, 958 (9th Cir. 2003)); Whitney
5 v. Robertson, 124 U.S. 190, 194 (1888) (noting that courts should “endeavor to
6 construe [statutes and treaties] so as to give effect to both, if that can be done
7 without violating the language of either”) (emphasis added).
8 In this case, the interpretation the government claims is more consistent with
9 the OECD Convention is not supported by the text of the statute, and there is no
10 legislative history suggesting Congress intended to adopt this interpretation when it
11 amended the FCPA. Indeed, the interpretation the government proffers distorts the
12 statute and its history, rendering the Charming Betsy canon inapplicable. Munoz,
13 339 F.3d at 958 (refusing to apply the Charming Betsy doctrine because the statute
14 in question could not be fairly construed consistently with the treaty the plaintiff
15 cited because “[t]he language of the statute provides absolutely no support for such
16 a construction” and “Congress never suggested or hinted that” it meant for the
17 statute to conform).
18 In addition, the government’s interpretation of the 1998 amendments fails to
19 take account of the fact that the only legislative history on point indicates that
20 Congress appeared uncertain about whether the FCPA applied to payments to
21 employees of state owned corporations. During a hearing on H.R. 4353 (the House
22 analogue to S. 2375, which would ultimately become the Public Law amending the
23 FCPA in 1998, the Associate Director of the SEC’s Division of Enforcement, Paul
24 Gerlach, discussed the bill with Representative Thomas Manton. Rep. Manton
25 asked Mr. Gerlach, “The [FCPA] doesn’t cover bribes to non-governmental
26 people; is that correct?” The International Anti-Bribery and Fair Competition Act
27 of 1998: Hearing Before the Subcomm. on Finance and Hazardous Materials of
28 the Comm. on Commerce, 105th Cong. 22 (1998) (Testimony of Paul V. Gerlach,
9
1 Associate Director, Division of Enforcement, Securities and Exchange

2 Commission). Mr. Gerlach responded that that was correct, and that “[f]oreign
3 official is a defined term.” Id. Rep. Manton responded, “And that’s a public
4 official. It’s not someone who simply doesn’t hold an official position but is a
5 decisionmaker within a foreign company that some U.S. Company might want to
6 do business with.” Id. Mr. Gerlach did not disagree, as one might have expected
7 him to were Rep. Manton’s statement clearly contradicted by the language and
8 history of the FCPA. Instead, he only responded:
9 Well there are some interesting legal issues if what
you’re talking about is a foreign state operated enterprise
10
where the foreign government perhaps has substantial
11 ownership of the company. I can imagine certain
scenarios where substantial government involvement in
12
commercial enterprise could provide us the basis for
13 arguing that an official of that enterprise qualifies as a
foreign government official.
14
15 Id. at 23 (emphasis added).3

16 Finally, the government fails to note that article 1.4.a. is not the only part of
17 the OECD Convention at issue. The OECD did not intend to target payments to all
18 employees of state owned entities. Instead, article 1.4.a. of the Convention targets
19
3
20 In the end, whether Congress intended to or successfully did adopt
everything in the Convention is an open question. The government has not
21 demonstrated that all other Convention clauses are captured by the FCPA. Indeed,
22 one court, though it acknowledged the Charming Betsy doctrine, nevertheless
noted that there may be “some variation in scope between the Convention and the
23 FCPA.” United States v. Kay, 359 F.3d 738, 755 n.67 (5th Cir. 2004); see United
24 States v. Aguilar, 883 F.2d 662, 679 (9th Cir. 1989) (“In enacting statutes,
Congress is not bound by international law; if it chooses to do so, it may legislate
25 contrary to the limits posed by international law”). If Congress wishes to amend
26 the statute to be in greater conformity with the OECD Convention, it may, but
foreign policy concerns in the meantime do not overwhelm the right of LMC, Dr.
27 Lindsey and Mr. Lee to be prosecuted only pursuant to a statute that adequately
28 gave them notice that their conduct was illegal.
10
1 only payments to such employees performing a “public function,” which is a

2 defined term. Specifically, Commentary 15 to the Convention provides that:
3
[a]n official of a public enterprise shall be deemed to
4 perform a public function unless the enterprise operates
on a purely commercial basis in the relevant market, i.e.,
5
on a basis which is substantially equivalent to that of a
6 private enterprise, without preferential subsidies or other
privileges.
7
8 OECD Convention Commentaries, supra note 2, Commentary 15.4 The

9 government asks the Court to assume that Congress did not amend the FCPA in
10 1998 to address state owned corporations because it believed “instrumentality”
11 already encompassed state owned entities addressed by the Convention (despite the
12 absence of a single statement to this effect in the legislative history). But to do so,
13 the Court would have to come full circle and assume that Congress meant to adopt
14 not just that “public enterprise” employees are targeted by the FCPA, but also that
15 they are so if they are performing a “public function,” which is in turn precisely
16 defined. Not only is it difficult to believe that if anyone in Congress made this
17 nuanced inference, given that no one said anything in the record about it, but the
18 implications of the assumption the government asks the Court to make are broader
19 than it acknowledges. Pursuant to OECD Convention (if it were implied into the
20 FCPA), any “enterprise” receiving “preferential subsidies or other privileges”
21 could trigger the FCPA. This could capture any member of the U.S. farm industry
22 and any number of others that Congress surely did not intend to capture. The
23 Convention is thus potentially more narrow (not all public enterprises are covered)
24 and more broad (enterprises that receive public subsidies are covered) than the
25
4
26 The Court should interpret the terms of the Convention in accordance with
the OECD Convention Commentaries because they were “adopted by the
27 Negotiating Conference[.]” See Vienna Convention on the Law of Treaties, 1155
28 U.N.T.S. 331, art. 31 (May 23, 1969).
11
1 government suggests. Nothing in the text or legislative history of the FCPA

2 addresses, much less approves, the adoption of the OECD’s nuanced “public
3 enterprises” concept.
4 Under these circumstances, there is no basis for the Court to “strive to
5 interpret” the FCPA as entirely consistent with the OECD Convention. Instead, as
6 defendants established in their motion to dismiss, the Court should determine that
7 Congress could have but deliberately did not bring the FCPA into perfect
8 conformity with the OECD Convention because it chose not to adopt the “state
9 owned enterprise” language from the Convention in 1998, just as it chose not to
10 incorporate these entities in 1977 and 1988. See Def. Mot. at 14-19.
11 D. No Legislative History Supports the Government’s Interpretation
12 The government chides the defendants for not being able to point to direct,
13 explicit proof in the legislative history of the FCPA that Congress intended to
14 exclude state owned companies from the definition of instrumentality. Gov’t Opp.
15 at 30. But not only can the government also not point to any direct proof of its
16 own position on the history, the government’s citation to a portion of the
17 legislative history is misleading.
18 The government points to a statement in the record indicating that Congress
19 “stated its intention to address foreign bribery throughout the international
20 economy, including bribery in the sectors of ‘drugs and health care; oil and gas
21 production and services; food products; aerospace, airlines and air services; and
22 chemicals[.]’” Gov’t Opp. at 31-32 (citing H. Rep. No. 95-640 (1977) at 4-5). The
23 government asserts (without support) that these sectors were “rife with state-owned
24 and state controlled companies when the FCPA was passed in 1977,” and
25 concludes that state owned and state controlled entities were thus “within
26 Congress’s intended definition of instrumentalities of a foreign government.” Id.
27 The government is wrong about the meaning of the legislative history upon
28 which it relies. Every time that Congress addressed these sectors in the FCPA
12
1 legislative history, it is apparent that Congress was addressing people and

2 companies in those sectors who had paid bribes to foreign officials, not those who
3 had received bribes. There is no indication that Congress had in mind that the
4 payees addressed by its bills had any role in these sectors. See United States v.
5 Carson, et al., No. SA CR 09-00077-JVS (C.D. Cal.), Declaration of Professor
6 Michael J. Koehler in Support of Defendants’ Motion to Dismiss Counts One
7 through Ten of the Indictment, and Exhibits Thereto (Docket Nos. 305 & 306) at
8 ¶¶ 197, 201, 235, 241-42, 250-51 (quoting in context the instances in which
9 Congress listed these sectors). Moreover, there is no indication in any of these
10 statements that Congress had in mind payments to any corporate bodies involved
11 in these industries despite the government’s unsupported assertion that these
12 sectors were “rife” with state owned corporations.
13 In the portion of the record demonstrating that Congress was presented with
14 but decided not to adopt language explicitly bringing state owned entities into the
15 FCPA, the government finds “evidence” that Congress intended to address state
16 owned entities with the FCPA. Gov’t Opp. at 32-34; contra Def. Mot. at 16-18
17 (citing the same bills for the opposite proposition). The government argues that in
18 choosing to add “instrumentality” to the list of entities whose employees would be
19 “foreign officials,” Congress chose a broad term and rejected using more narrow
20 terms. Of course, there is no evidence of this purported decision and the argument
21 circularly relies on the presumption that “instrumentality” in the FCPA is meant to
22 be as broadly understood as the government says it is, an unsupported proposition.
23 Moreover, the government’s point that the Court should find “significant” that
24 Congress chose a single general term over “an enumerated list,” Gov’t Opp. at 32-
25 34, is completely misplaced. Congress did not choose one term to broadly describe
26 all entities that can trigger the “foreign official” element, as the government
27 suggests. To the contrary, Congress placed instrumentality at the end of an
28 enumerated list that included “department” and “agency.” As set forth here and in
13
1 defendants’ motion, this does not suggest that instrumentality should be interpreted
2 broadly, but, rather, that it should be interpreted narrowly.
3 The defendants have demonstrated that the text, context, and history of the
4 FCPA establish that Congress did not intend to address payments to employees of
5 state owned corporations by way of the definition of “foreign official” and
6 specifically the use of “instrumentality” in the FCPA. The government has failed
7 to adequately – let alone conclusively – support its rebuttal that the statute silently
8 makes payments to such employees illegal. There is enough in the record for the
9 Court to decide conclusively that state owned corporations are not
10 “instrumentalities” and the FSI is therefore invalid as a matter of law. However, at
11 a minimum, there is enough ambiguity in the scope of the FCPA to trigger the rule
12 of lenity, requiring the court to dismiss any indictment based on a statute “whose
13 commands are uncertain.” See United States v. Santos, 553 U.S. 507, 514 (2008);
14 Def. Mot. at 21. In either case, the Court should dismiss the FSI.
15 E. The Government Fails to Rebut Defendants’ Vagueness
16 Arguments
17 The government does not substantively address the defendants’ vagueness
18 argument, which is that the government’s interpretation of the FCPA leaves to
19 government authorities the job of deciding to whom the statute should apply.
20 Instead, the government claims defendants misapply the constitutional vagueness
21 doctrine. The Court should disregard this diversion.
22 As an initial matter, the government overstates the rule that statutes
23 implicating First Amendment freedoms are subject to greater scrutiny under the
24 vagueness doctrine when it suggests that only statutes implicating First
25 Amendment freedoms may be challenged as vague on their face. Gov’t Opp. at
26 37-38. Although it is true that courts do ordinarily entertain facial vagueness
27 challenges to only a limited category of statutes, including those that implicate
28 First Amendment rights, this is not for the reasons the government gives. A court
14
1 facing a facial vagueness challenge that does not implicate fundamental rights like
2 the First Amendment typically examines first the statute as it is applied because if
3 it is not vague as applied to the complaining party, the court need not void the
4 statute as a whole, a step the courts are loathe to take.
5 In a facial challenge to the overbreadth and vagueness of
6
a law, a court's first task is to determine whether the
enactment reaches a substantial amount of
7 constitutionally protected conduct. If it does not, then the
8
overbreadth challenge must fail. The court should then
examine the facial vagueness challenge and, assuming
9 the enactment implicates no constitutionally protected
10 conduct, should uphold the challenge only if the
enactment is impermissibly vague in all of its
11 applications. A plaintiff who engages in some conduct
12 that is clearly proscribed cannot complain of the
vagueness of the law as applied to the conduct of others.
13 A court should therefore examine the complainant's
14 conduct before analyzing other hypothetical applications
of the law.
15 Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc. 455 U.S. 489, 494-
16 95 (1982) (emphasis added).5
17
18 5
The Supreme Court cited United States v. Mazurie, 419 U.S. 544, 550
19 (1975), for the proposition that “a plaintiff who engages in some conduct that is
clearly proscribed cannot complain of the vagueness of the law as applied to the
20
conduct of others” in Village of Hoffman Estates. 455 U.S. at 495 n.7. The
21 government relies on the same case to support its argument that a facial challenge
is necessarily completely precluded in this case. Gov’t Opp. at 37. But the Court
22
immediately explained in Village of Hoffman Estates that this statement in Mazurie
23 and other similar statements should not be taken so literally as a rule precluding all
other facial challenges:
24
25 One to whose conduct a statute clearly applies may not

successfully challenge it for vagueness. The rationale is
26 evident: to sustain such a challenge, the complainant
27 must prove that the enactment is vague not in the sense
that it requires a person to conform his conduct to an
28 imprecise but comprehensible normative standard, but
15
1 This procedure explains the Supreme Court’s approach in Skilling v. United

2 States, 130 S. Ct. 2896 (2010), although the Supreme Court did not address the
3 issues in exactly the same order suggested in the Village of Hoffman Estates case.
4 Skilling challenged an honest services fraud charge leveled at him pursuant to 18
5 U.S.C. § 1346. Id. at 2907. Though the statute did not implicate First Amendment
6 rights, Skilling asked the Court to invalidate the entire statute. Id. The Court
7 focused first on whether the statute was vague as applied to Skilling, however,
8 because it preferred, if possible, to “construe, not condemn, Congress’
9 enactments.” Id. at 2904. After examination of the text and history of section
10 1346 to discern its “core,” the Court found that, at its core, “the statute criminalizes
11 only the bribe-and-kickback core of the pre-McNally case law.” Id. at 2931. It
12 further found that, thus understood, the statute satisfied the vagueness standards of
13 Kolender v. Lawson, 461 U.S. 352, 357 (1983). Id. at 2933 (stating that,
14 “[i]nterpreted to encompass only bribery and kickback schemes, § 1346” provides
15 fair notice of prohibited conduct and does not invite arbitrary and discriminatory
16 prosecutions). However, the Court reversed Skilling’s conviction because Skilling
17 was never charged with soliciting or receiving a bribe or kickback in exchange for
18 the misrepresentations he was alleged to have made. Id. at 2935. This was simply
19 another way of holding the statute vague as applied to the allegations leveled at
20 Skilling, although the Court found Section 1346 was not void on its face.
21 Defendants’ argument in the alternative is that, first, the statute is void as a
22 whole because – unlike the situation in Skilling – there actually is no discernable
23 core within the broad and vague term “instrumentality.” See Def. Mot. at 22-23.
24
25
rather in the sense that no standard of conduct is
26
specified at all. Such a provision simply has no core.
27
Id. (internal quotations and citations omitted).
28
16
1 Second, the vagueness in the statute is not saved by its application to the
2 allegations at issue here. See Def. Mot. at 23-24. If the text and legislative history
3 suggest anything in this case, it is that entities more similar to agencies and
4 departments than are corporations (such as government bureaus or ministries) are
5 at the core of what Congress had in mind when it included “instrumentality” in the
6 “foreign official” definition. See id. Because the FSI does not allege that the
7 defendants bribed officials of such entities, the FSI is invalid, just as the indictment
8 in Skilling was invalid.
9 F. Prior Cases the Government Cites are Inapposite Because They
10 Did Not Raise Issues the Court Is Now Asked to Address
11 The government stretches when it claims that this Court should be persuaded
12 to adopt its position because “every court that has faced the issue has decided that
13 officials of state-owned entities can be foreign officials.” Gov’t Opp. at 26. Only
14 two courts have arguably “faced” this issue, and the many reasons the Court should
15 give little weight to their decisions (most of which the government ignores) are
16 outlined in footnote 4 of defendants’ motion. Def. Mot. at 3-4 n.4 (discussing the
17 Nguyen and Esquenazi cases). More importantly, no appellate court or court in this
18 Circuit has ever examined the issue.
19 The government also suggests that the Court should look for guidance to
20 jury instructions in certain cases, which – the government claims – reflect that
21 courts “examining the issue have instructed the jury that the definition of
22 government instrumentality includes companies owned or controlled by the state.”
23 Gov’t Opp. at 29 (discussing instructions in United States v. Bourke in the
24 Southern District of New York and United States v. Jefferson in the Eastern
25 District of Virginia). However, the proper instruction on “instrumentality” was not
26 a disputed issue in either Bourke or Jefferson.
27 Finally, the government also suggests that plea agreements in unrelated
28 cases serve as precedent. Gov’t Opp. at 27-28. Defendants plead guilty for any
17
1 number of reasons, as the Court is well aware. Federal Rule of Criminal Procedure
2 11(b)(3) does require that, “[b]efore entering judgment on a guilty plea, the court
3 must determine that there is a factual basis for the plea.” However, the
4 government is wrong when it argues that the rule means that a district court must
5 “assess the law” and not accept a guilty plea if it conflicts in any way with the law.
6 See Gov’t Opp. at 28. Rule 11 does not and never has required that a court take
7 that step. In fact, the drafters of the 1966 amendments to Rule 11 specifically
8 considered and rejected a proposal to insert language that would have required
9 courts to assess the validity any legal conclusions that may be built into a plea
10 before accepting a guilty plea, and to be satisfied “that the defendant in fact
11 committed the crime charged.” Wright & Leipold, Federal Practice and Procedure:
12 Criminal 4th §170, at 145 (2008), citing Preliminary Draft of Proposed
13 Amendments to Rules of Criminal Procedure, Dec. 1962, at 3; see also, United
14 States v. Giffen, 326 F. Supp. 2d 497, 505 (S.D.N.Y. 2004) (stating that three
15 indictments reflecting the government’s theory “is not the kind or quality of
16 precedent this Court need consider”). Indeed, in the Nguyen case the government
17 itself cites, when the defendant pled guilty after the court rejected his motion to
18 dismiss based on the instrumentality definition, the court that accepted his plea
19 stated during sentencing, “When I asked them for an admission of what they did, I
20 wanted to know whether or not they admitted to the facts. I didn’t ask them if they
21
22 ///
23
24 ///
25
26
27
28
18
1 admitted to the conceded legal conclusions. That [the entity defendant allegedly
2 bribed “was an agency or instrumentality”] is a legal conclusion.” 6 United States
3 v. Nguyen, et al., No. 08-522-TJS (E.D. Pa.), Transcript of Sep. 15, 2010
4 Sentencing Proceedings (Docket No. 211, entered Oct. 6, 2010), at 20:19-23.
5 In sum, the Court should disregard the government’s references to other,
6 unrelated, out of circuit, and non-binding decisions or proceedings.
7 ///
8
10 ///
11
12
13 ///
14
15
16 ///
17
18
19 ///
20
21
22
23
24
6
Surely the government would never agree that its decision to voluntarily
25 dismiss an indictment or accept a plea to a lesser charge in lieu of going to trial in
26 the face of a defendant’s arguments in a particular case meant the government
agreed with those arguments, or that a court decision condoning such a
27 discretionary decision serves as some sort of precedent. Yet, this is the logical
28 extension of the government’s arguments here.
19
1 III. CONCLUSION
2 If Congress had meant to prohibit bribes to any entity “through which a
3 government achieves an end or purpose,” as the government would have it, Gov’t
4 Opp. at 11, it could have done so clearly and directly in the “foreign official”
5 definition. See Skilling, 1130 S. Ct. at 2933 (internal citation and quotations
6 omitted). Instead, as discussed above, it chose to define “foreign official” with two
7 particular terms with defined and recognized meanings, and a more general term
8 that the Court should interpret to include only terms that share key characteristics
9 with the former two. The Court should not allow executive enforcement agencies
10 to be the arbiters of which government tools are within the ambit of the FCPA, and
11 should accordingly dismiss the FSI.
12

14
JANET I. LEVINE
16
_/s/ Janet I. Levine __________________
17 By: JANET I. LEVINE
18 Attorney for Defendant
Steve K. Lee
19
20 DATED: March 17, 2011 JAN L. HANDZLIK

21 GREENBERG TRAURIG LLP
22 __/s/ Jan L. Handzlik___________________

23 By: JAN L. HANDZLIK
Attorneys for Defendants
24 Lindsey Manufacturing Company and
25 Keith E. Lindsey
26
27
28
20
1 PROOF OF SERVICE
2 STATE OF CALIFORNIA, COUNTY OF LOS ANGELES
3 I am employed in the County of Los Angeles, State of California, at Crowell
4 & Moring LLP at 515 S. Flower Street, 40th Floor, Los Angeles, California 90071.
5 I am over the age of 18 and not a party to the within action.
6 On March 17, 2011, I served the foregoing document described as REPLY
7 TO GOVERNMENT’S OPPOSITION TO DEFENDANTS’ MOTION TO
8 DISMISS THE FIRST SUPERSEDING INDICTMENT on the parties in this
9 action by electronically filing the foregoing with the Clerk of the District Court
10 using its ECF System, which electronically notifies the following:
11 Douglas M. Miller (Assistant United States Attorney)
Email: doug.miller@usdoj.gov
12
Nicola J. Mrazek (United States Department of Justice Senior Trial
13 Attorney)
Email: nicola.mrazek@usdoj.gov
14
Jeffrey Goldberg (United States Department of Justice Senior Trial Attorney)
15 Email: jeffrey.goldberg2@ usdoj.gov
16 Jan L. Handzlik (Attorney for Defendants Lindsey Manufacturing Company
17 and Keith E. Lindsey)
Email: handzlikj@gtlaw.com
18 Email: godwint@gtlaw.com
19
Stephen G. Larson (Attorney for Defendant Angela Maria Gomez Aguilar)
20
Email: slarson@girardikeese.com
21 Email: mweber@girardikeese.com
22
I declare under penalty of perjury under the laws of the State of California
23
that the above is true and correct.
24
Executed on March 17, 2011, at Los Angeles, California.
25
26
_/s/Kristen Savage Garcia________________
27 KRISTEN SAVAGE GARCIA
28

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Case 2:10-cr-01031-AHM Document 290 Filed 03/17/11 Page 1 of 27 Page ID #:6420

1 JANET I. LEVINE (STATE BAR NO. 94255)

17 UNITED STATES OF AMERICA, ) CASE NO. CR 10-1031(A)-AHM

17 Smith v. City of Jackson,

1 United States v. Mazurie,

3 United States v. Nguyen, et al.,

18 Commentaries on the Convention on Combating Bribery of Foreign Public

24 The International Anti-Bribery and Fair Competition Act of 1998: Hearing

1 Restatement (Third) of Foreign Relations Law § 114............................................... 8

1 Defendants Lindsey Manufacturing Company, Keith E. Lindsey, and Steve

5 DATED: March 17, 2011 Respectfully submitted,

9 _/s/ Janet I. Levine __________________

13 DATED: March 17, 2011 Respectfully submitted,

17 __/s/ Jan L. Handzlik___________________

1 CFE, operate commercial enterprises). In every country, agencies and departments

1 public enterprise.” Gov’t Opp. at 14-16 (quoting Organization for Economic

1 comity and only ‘where it is possible to do so without distorting the statute.’”

1 Associate Director, Division of Enforcement, Securities and Exchange

15 Id. at 23 (emphasis added).3

1 only payments to such employees performing a “public function,” which is a

8 OECD Convention Commentaries, supra note 2, Commentary 15.4 The

1 government suggests. Nothing in the text or legislative history of the FCPA

1 legislative history, it is apparent that Congress was addressing people and

25 One to whose conduct a statute clearly applies may not

1 This procedure explains the Supreme Court’s approach in Skilling v. United

13 DATED: March 17, 2011 Respectfully submitted,

20 DATED: March 17, 2011 JAN L. HANDZLIK

22 __/s/ Jan L. Handzlik___________________

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17 /s/ Jan L. Handzlik_________________

22 /s/ Jan L. Handzlik_________________